Press Release

CORRECTING and REPLACING American Equity Reports Second Quarter 2013 Results

WEST DES MOINES, Iowa--(BUSINESS WIRE)--Jul. 31, 2013--
Paragraph beneath SPREAD IMPROVES AS CASH AND SHORT-TERM INVESTMENTS
REDUCED, first sentence should read: American Equity’s investment spread
for the second quarter of 2013 increased to 2.70% compared to 2.68% for
the first quarter of 2013 (sted American Equity’s investment spread for
the first quarter of 2013 increased to 2.70% compared to 2.68% for the
first quarter of 2013).

The corrected release reads:

AMERICAN EQUITY REPORTS SECOND QUARTER 2013 RESULTS

American Equity Investment Life Holding Company (NYSE: AEL), a leading
underwriter of index and fixed rate annuities, today reported second
quarter 2013 net income of $120.1 million, or $1.71 per diluted common
share, compared to second quarter 2012 net income of $18.8 million, or
$0.30 per diluted common share.

Non-GAAP operating income1 for the second quarter of 2013 was
$30.3 million, or $0.43 per diluted common share, compared to second
quarter 2012 non-GAAP operating income1 of $27.4 million or
$0.43 per diluted common share.

Second quarter 2013 net income and non-GAAP operating income1
includes an after tax charge of $5.5 million or $0.08 per diluted common
share to cover assessments from state guaranty fund associations related
to the insolvency of Executive Life Insurance Company of New York
(“ELNY”). Excluding this charge, second quarter 2013 non-GAAP operating
income1 was $35.8 million, or $0.51 per diluted common share.

Highlights for the second quarter of 2013 include:

Pre-charge non-GAAP operating income1 per share of $0.51 up
19% compared to second quarter 2012.

Book value per share (excluding accumulated other comprehensive
income) increased to $18.66 at June 30, 2013 compared to $16.84 at
March 31, 2013.

1 In addition to net income, we have consistently utilized
operating income and operating income per common share – assuming
dilution, non-GAAP financial measures commonly used in the life
insurance industry, as economic measures to evaluate our financial
performance. See accompanying tables for reconciliations of net income
to operating income and descriptions of reconciling items. See Company’s
Quarterly Report on Form 10-Q for a more complete discussion of the
reconciling items and their impact on net income for the periods
presented. Because these items fluctuate from period to period in a
manner unrelated to core operations, we believe measures excluding their
impact are useful in analyzing operating trends. We believe the combined
presentation and evaluation of operating income together with net
income, provides information that may enhance an investor’s
understanding of our underlying results and profitability.

Commenting on results, David J. Noble, founder and Executive Chairman
said: “Second quarter 2013 financial results were very satisfactory.
Assets under management grew 4% from last quarter which includes sales
of $1.1 billion. Our operating income1 per share, exclusive
of the charge for the ELNY state guaranty fund assessments, grew 19%
year over year and translated into an 11.1% return on average equity for
the trailing 12 months. And most importantly, our investment spread for
the quarter was 2.70% and we made significant progress investing our
excess cash and short-term investments into higher yielding investments.”

SPREAD IMPROVES AS CASH AND SHORT-TERM INVESTMENTS REDUCEDAmerican
Equity’s investment spread for the second quarter of 2013 increased to
2.70% compared to 2.68% for the first quarter of 2013. Second quarter
2013 investment spread and average yield on invested assets continued to
be affected by the impact of high levels of low yielding cash and
short-term investments during the quarter. The average yield on invested
assets including the excess cash and short-term investments
balances was 4.94% for the second quarter of 2013 compared to 5.01% in
the first quarter of 2013 and 5.34% in the second quarter of 2012.

American Equity reduced the average balance for excess cash and
short-term investments to $1.7 billion in the second quarter of 2013
from $1.8 billion in the first quarter of 2013 and $2.7 billion in the
fourth quarter of 2012. The average balance in the second quarter of
2012 was $1.45 billion. The growth of this balance in 2012 was primarily
attributable to calls of U.S. Government agency securities. At June 30,
2013, the Company held $816 million in excess cash and short-term
investments compared to $1.3 billion and $2.2 billion at March 31, 2013
and December 31, 2012, respectively.

Average yield on invested assets continues to decline as proceeds from
securities called for redemption and new premiums are invested at rates
below the portfolio rate. The average yield on fixed income securities
purchased and commercial mortgage loans funded in the second quarter of
2013 was 3.49% compared to an average yield of 3.48% in the first
quarter of 2013. The decrease in investment yield was offset by a
reduction in the aggregate cost of money on annuity liabilities to 2.24%
in the second quarter of 2013 compared to 2.33% in the first quarter of
2013 and 2.64% in the second quarter of 2012. The reductions in the cost
of money reflect adjustments to new money and renewal crediting rates to
policyholders.

John M. Matovina, Chief Executive Officer and President commented: “We
continue to believe that restoring our investment spread to the 3.00%
target is a realistic and achievable objective. Because we made more
progress in reducing the excess cash and short-term investments balance
during the second quarter than we had previously expected, we now expect
to be in a fully invested position by the end of the third quarter of
2013. At current rates and market conditions, our call exposure for the
remainder of 2013 is $500 million of agency bonds that are callable in
October. These bonds were purchased at a premium to par with yields of
0.72% - 0.77% through their expected initial call dates in July 2013.
The securities were not called in July and now yield 3.75%. However,
they are callable quarterly and a modest decline in interest rates from
current levels could result in the calls being exercised on their next
call dates in October.”

Matovina concluded, “Even as the income side of our spread measurement
improves, we maintain flexibility to reduce our cost of money through
adjustments to fixed crediting rates, caps and participation rates. We
expect further declines in our cost of money from rate adjustments
already implemented and will be making further renewal rate adjustments
in 2013 and 2014. We have room to reduce our cost of money by another 60
bps before bumping up against minimum guaranteed rates.”

OUTLOOKCommenting on the outlook for American Equity, David
Noble said: “American Equity has always prided itself on being a growth
company, and the results this quarter confirm our commitment to grow.
Operating income1 per share—adjusted for the ELNY guaranty
fund assessment charge—grew 19% over the year-ago quarter, and has
increased sequentially for the last three quarters. Our assets under
management are up 14% in the last twelve months and we are optimistic
our sales momentum will carry through the balance of the year.

Noble continued, “We delivered this growth while conservatively managing
our risks and financial profile, sustaining a double-digit operating
return on average equity, and maintaining a cushion to our targeted RBC
ratio. American Equity is well positioned to capitalize on the growing
demand for guaranteed retirement savings and income products and expect
our invested assets and earnings to continue to grow in the periods
ahead.”

LIABILITY MANAGEMENTOn July 17, 2013, the Company issued
$400 million aggregate principal amount of its 6.625% Senior Notes due
2021 (the “Notes”). The Company used $15 million of the net proceeds
from the Notes issuance to repay the entire amount outstanding under the
Company’s revolving credit facility and intends to use the remaining net
proceeds to pay the cash consideration required to purchase the
Company’s outstanding convertible note issues pursuant to exchange
offers the Company anticipates making to the holders of the convertible
notes in the near future.

On March 25, 2013, notice of mandatory redemption was issued for the
Company’s 5.25% Contingent Convertible Senior Notes Due 2024.
Approximately $25.8 million principal amount or 91% of the convertible
notes exercised their conversion rights prior to the April 30, 2013
mandatory redemption date. The holders of these notes received the
principal amount of their notes in cash and 216,729 shares of American
Equity common stock for the conversion premium. The balance of the
convertible notes ($2.45 million principal amount) was redeemed for cash
of $2.5 million (includes accrued interest of $0.05 million).

CAUTION REGARDING FORWARD-LOOKING STATEMENTSThis press
release contains forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. Forward-looking
statements relate to future operations, strategies, financial results or
other developments, and are subject to assumptions, risks and
uncertainties. Statements such as “guidance”, “expect”, “anticipate”,
“believe”, “goal”, “objective”, “target”, “may”, “should”, “estimate”,
“projects” or similar words as well as specific projections of future
results qualify as forward-looking statements. Factors that may cause
our actual results to differ materially from those contemplated by these
forward looking statements can be found in the company’s Form 10-K filed
with the Securities and Exchange Commission. Forward-looking statements
speak only as of the date the statement was made and the company
undertakes no obligation to update such forward-looking statements.
There can be no assurance that other factors not currently anticipated
by the company will not materially and adversely affect our results of
operations. Investors are cautioned not to place undue reliance on any
forward-looking statements made by us or on our behalf.

CONFERENCE CALLAmerican Equity will hold a conference call
to discuss second quarter 2013 earnings on Thursday, August 1, 2013, at
10:00 a.m. CDT. The conference call will be webcast live on the
Internet. Investors and interested parties who wish to listen to the
call on the Internet may do so at www.american-equity.com.

The call may also be accessed by telephone at 866-515-2915, passcode
44827480 (international callers, please dial 617-399-5129). An audio
replay will be available via telephone through August 22, 2013 at
1-888-286-8010, passcode 66406844 (international callers will need to
dial 617-801-6888).

ABOUT AMERICAN EQUITYAmerican Equity Investment Life
Holding Company, through its wholly-owned operating subsidiaries, is a
full service underwriter of fixed annuity and life insurance products,
with a primary emphasis on the sale of index and fixed rate annuities.
American Equity Investment Life Holding Company, a New York Stock
Exchange Listed company (NYSE: AEL), is headquartered in West Des
Moines, Iowa. For more information, please visit www.american-equity.com.

In addition to net income (loss), we have consistently utilized
operating income and operating income per common share - assuming
dilution, non-GAAP financial measures commonly used in the life
insurance industry, as economic measures to evaluate our financial
performance. Operating income equals net income adjusted to
eliminate the impact of net realized gains and losses on investments
including net OTTI losses recognized in operations, fair value
changes in derivatives and embedded derivatives, loss on
extinguishment of debt and changes in litigation reserves. Because
these items fluctuate from quarter to quarter in a manner unrelated
to core operations, we believe measures excluding their impact are
useful in analyzing operating trends. We believe the combined
presentation and evaluation of operating income together with net
income provides information that may enhance an investor’s
understanding of our underlying results and profitability.

Reconciliation from Net Income to
Operating Income (Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

(Dollars in thousands, except per share data)

Net income

$

120,113

$

18,759

$

146,144

$

29,230

Adjustments to arrive at operating income:

Net realized investment (gains) losses, including OTTI (a)

(3,574

)

861

(6,378

)

4,408

Change in fair value of derivatives and embedded derivatives (a)

(84,653

)

7,736

(74,416

)

23,478

Litigation reserve (a)

(1,969

)

—

(1,969

)

—

Extinguishment of debt

345

—

345

—

Operating income (a non-GAAP financial measure)

$

30,262

$

27,356

$

63,726

$

57,116

Per common share - assuming dilution:

Net income

$

1.71

$

0.30

$

2.09

$

0.46

Adjustments to arrive at operating income:

Net realized investment (gains) losses, including OTTI

(0.05

)

0.01

(0.09

)

0.07

Change in fair value of derivatives and embedded derivatives

(1.20

)

0.12

(1.06

)

0.37

Litigation reserve

(0.03

)

—

(0.03

)

—

Extinguishment of debt

—

—

—

—

Operating income (a non-GAAP financial measure)

$

0.43

$

0.43

$

0.91

$

0.90

(a)

Adjustments to net income to arrive at operating income are
presented net of related adjustments to amortization of deferred
sales inducements (DSI) and deferred policy acquisition costs (DAC)
and net of income taxes.

American Equity Investment Life Holding
Company

NON-GAAP FINANCIAL MEASURES

Average Stockholders' Equity and Return
on Average Equity

Return on equity measures how efficiently we generate profits from
the resources provided by our net assets. Return on equity is
calculated by dividing net income and operating income for the
trailing twelve months by average equity excluding average
accumulated other comprehensive income ("AOCI").

Twelve Months

Ended

June 30, 2013

(Dollars in

thousands)

Average Stockholders' Equity 1

Average equity including average AOCI

$

1,509,864

Average AOCI

(412,076

)

Average equity excluding average AOCI

$

1,097,788

Net income

$

174,712

Operating income

116,797

Return on Average Equity Excluding Average AOCI

Net income

15.91

%

Operating income

10.64

%

1

-

simple average based on stockholders' equity at beginning and end of
the twelve month period.